Q. But why would anyone create a 529 plan with the child as the beneficiary. Isn't it always better to create it in one's own name and then change beneficiary to the child when the time comes to pay for the child's college?
A. No.
As @SusanY1 said, the funds could later appreciate to a level that could be above the exclusion amount and trigger a gift tax return filing requirement.
In addition, you are allowed an annual (every year) gift tax exclusion for contributing to a child beneficiary's 529. There is also a special exception to the annual exclusion that applies to 529 college savings plans that allows you to front-load contributions without exceeding the limit. This strategy allows taxpayers to make a lump sum contribution to a 529 plan of up to five times the annual gift tax exclusion, if the contribution is treated as if it were spread over a five year period. That means you can contribute up to $80,000 to a 529 plan ($160,000 if married giving jointly) in a single year and not have to file a gift tax return.
